PSW Weekly Round-Up - 9/24

House Floor. The House plans to pass its Tax Reform 2.0 package and take action on matters with a Sept. 30 deadline -- government funding, reauthorizing the activities of the Federal Aviation Administration, and possibly the 2018 farm bill. If House and Senate negotiators iron out their differences on legislation to combat the opioid crisis, the compromise measure could be considered in both chambers. The House is looking to adjourn at the end of the week and not return until after the midterms.

Senate Floor. The Senate will take up legislation to extend FAA activities and possibly send an opioids bill to the President. It remains to be seen how the farm bill will be handled.

Government Funding. The House will give final approval to the FY 2019 appropriations measure funding Defense/Labor-HHS-Education. The measure, which cleared the Senate last week, contains a Continuing Resolution providing funding until Dec. 7 for those departments and agencies whose full-year appropriations bills have not been enacted. The President last week tweeted his displeasure with the bill, but he is expected to sign it to avoid a partial government shutdown.

Aviation Programs. In the early hours of Saturday morning, negotiators unveiled a deal to reauthorize FAA programs for five years. The measure could clear the House on Wednesday. With the House hoping to leave town by the end of the week, lawmakers may also pass a short-term extension that would continue FAA programs beyond Sept. 30 if the Senate is unable to pass the longer-term bill by then.

Farm Bill. The House version of the farm bill strengthens the work requirement for the Supplemental Nutrition Assistance Program (SNAP), formerly known as the food stamp program. House conservatives say a final bill can’t pass the House without these stricter provisions. Senators say a bill with those requirements won’t get 60 votes in their chamber. It may well be that the impasse is not resolved before the current farm bill expires on Sept. 30. If so, Congress could pass a short-term bill or do nothing for the time being since some of the major farm programs won’t be adversely affected until December. Opponents of this latter approach argue that important programs will indeed lapse on the 30^th and action needs to be taken before then.

Tax Reform 2.0. The House this week will pass three bills that comprise Tax Reform 2.0. The most prominent --- and controversial --- of the three would make permanent the individual and small-business tax cuts scheduled to expire at the end of 2025. It is no secret that this proposal does not have the votes to clear the Senate. Businesses interested in tax policy legislation are waiting until the lame duck session to see if Congress approves a tax package that could include provisions to encourage saving for retirement, extension of expired tax breaks, technical corrections to the 2017 tax reform bill, and legislative adjustments to the 2017 bill.

China Tariffs. U.S. tariffs on $200 billion worth of Chinese goods go into effect today, as do Chinese tariffs on $60 billion worth of U.S. goods. U.S. businesses are hoping there will be a product-exclusion process like the one afforded businesses after the initial tranche of 25% tariffs on $50 billion worth of Chinese goods. The Administration is not expected to set up an exclusion process for this round, believing that the lower 10% rate and other factors make an exclusion process unnecessary. The 10% rate will increase to 25% on Jan. 1, 2019. For the first two tariff lists that went into effect in July and August, an exclusion process has been outlined, with List 1 ($34 billion) exclusion requests due Oct. 9 and List 2 ($16 billion) exclusion requests due Dec. 18.

NAFTA Negotiations. A deal has yet to be finalized following Canadian Foreign Minister Chrystia Freeland’s meetings with United States Trade Representative Robert Lighthizer this past week. The sticking points for Canada (Chapter 19, dairy, cultural exemptions, and the potential imposition of tariffs on automotive exports) remain. A future ministerial meeting between Lighthizer and Freeland has not yet been scheduled. For a new NAFTA to fall under Trade Promotion Authority (TPA) requirements and be signed before the new Mexican president takes office on Dec. 1, the text of the agreement must be published by Sept. 30 and must –-- according to key Members of Congress --- reflect a trilateral agreement including Canada. The Canadian government is facing pressure from Canada’s business community and the opposition Conservative party to deliver a NAFTA deal. Should Canada not join by Sept. 30, USTR would need to work with Congress to determine whether there is flexibility in their interpretation and application of the TPA law.

Kavanaugh Hearing. On Thursday at 10 a.m., the Senate Judiciary Committee is scheduled to hear from Supreme Court nominee Brett Kavanaugh and Christine Blasey Ford. In light of new allegations from a second accuser over the weekend, Ranking Member Dianne Feinstein has requested that the hearing be delayed, but no changes in the schedule have been announced.

Elections Update

Big Picture. During this year’s primary elections Democrats turned out over four million more voters than did Republicans. Dems still hold the “enthusiasm gap” advantage over the GOP, though new data shows that the gap may be narrowing. One race that has flown under the radar is last Tuesday’s Texas special election to fill an open State Senate seat. Hillary Clinton carried it in 2016 by 12%. However, Republican Pete Flores upset Democrat Pete Gallego by 6%. Democrats should be concerned that this result could foreshadow overall low Hispanic turnout in November.

Quick Hits.

• Days Until Election: 43
• Generic Ballot Average: Democrats +10%, according to FiveThirtyEight.com
• Number of House Toss-ups: 32 (30 GOP Seats / 2 Dem Seats)
• Number of Senate Toss-ups: 8 (4 GOP Seats / 4 Dem Seats)

Factoid #1. Since the beginning of the 115^th Congress a total of 74 House members (50 GOP / 24 Dem) have either vacated or will vacate their seats come January. Separately, there are roughly 50 sitting incumbents seeking reelection in highly competitive races. It’s not unreasonable to think there could be 100+ new members of the House of Representatives sworn in next year.

Factoid #2. According to a recent study by the Cook Political Report, Senate races rated as toss-up generally break towards one party. In an examination of the past 10 election cycles, no party has won less than 67% of Senate races rated as toss-up. Current Senate toss-ups include four Democratic seats (ND, MO, IN, FL) and four Republican seats (AZ, NV, TN, TX).

Featured House Race -- New Mexico-2 (OPEN).

Trump won this district by 10% in 2016. Seven-term GOP Congressman Steve Pearce is retiring to run for Governor. The seat has been reliably Republican, except in 2008 when Pearce gave up his seat in a losing Senate bid.

Democrat Xochitl Torres Small is a 33-year-old water rights attorney who grew up in the district and previously served as Sen. Tom Udall’s principal staffer for southern New Mexico. Republican candidate state Rep. Yvette Herrell is a self-proclaimed “Trump conservative” with a background in real estate who plans to join the Freedom Caucus if elected.

Last week, the Cook Political Report and Larry Sabato moved the race to toss-up. The recent New York Times poll has the Democratic candidate leading by 1%.

While the district is 53% Hispanic, turnout for that demographic has been low historically, particularly during midterm elections. Torres Small holds the fundraising edge and may benefit from the statewide coordinated campaign, with Democrats Michelle Lujan Grisham (running for Governor) and Sen. Martin Heinrich (running for reelection) both polling well at the top of the ticket.

Featured Senate Race -- Arizona (OPEN).

The race for Republican Senator Jeff Flake’s open seat will produce the first female U.S. Senator to represent Arizona. The race pits Republican House Rep. Martha McSally, the first woman to fly in combat for the U.S. Air Force, against Democratic House Rep. Kyrsten Sinema. Trump carried Arizona by 3.5%.

The RealClearPolitics average of polls has Sinema leading the race by 1.5 points. An ABC15-OH Predictive Insights poll conducted in early September has McSally favored 49% - 46%.

Arizona last elected a Democrat to the Senate 30 years ago. Sinema has benefited from strong fundraising and the lack of a tough primary. Her path in the general may end up more complicated with a Green Party candidate on the ballot who could siphon votes from her in a tight race.